A new law is bringing far-reaching legal reform to Florida\u2019s insurance industry. Governor DeSantis signed House Bill 837 into law on March 24, 2023. HB 837 is intended to decrease the frivolous lawsuits that have been driving up insurance costs in the state.<\/p>\n
Inside HB 837<\/strong><\/p>\n According to Governor DeSantis<\/a>, \u201cFlorida has been considered a judicial hellhole for far too long and we are desperately in need of legal reform that brings us more in line with the rest of the country.\u201d According to Senate President Kathleen Passidomo, a few bad actors have been drawing out civil cases to collect more fees from insurance companies.<\/p>\n HB 837 aims to address this by:<\/p>\n Florida\u2019s Troubled Property Insurance Market<\/strong><\/p>\n The Insurance Information Institute<\/a> (Triple-I) says Florida homeowners pay the highest average premiums in the nation \u2013 and it\u2019s not due to hurricanes. Florida has more insurance-related litigation than any other state. Even though only 9% of all homeowners insurance claims occur in Florida, 79% of all homeowners insurance lawsuits occur in the state. These lawsuits drive up costs for insurance companies and their policyholders.<\/p>\n Part of the problem \u2013 according to Triple-I \u2013 is that Florida has a legal system that invites litigation. This is combined with the fact the state has had problems with roofing scams and fraud. Roofing scams often involve contractors who offer to inspect a roof and say they\u2019ve found damage. The contractor claims the homeowner can receive a free roof and the insurance deductible will be waived, but the contractor pressures the homeowner to sign an assignment of benefits (AOB) agreement that allows the contractor to file the claim. When the claim adjuster later finds little or no damage, the insurer denies the claim or offers a smaller amount. The contractor then sues the insurer. The insurer is forced to either fight the lawsuit or pay to settle it \u2013 either option is expensive.<\/p>\n Insurers Have Been Fleeing Florida<\/strong><\/p>\n Islander News<\/a> says at least 16 homeowners insurance companies have left the Florida insurance market. One of the companies \u2013 Bankers Insurance Group \u2013 cited the state\u2019s failure to combat fraud and litigation, saying \u201cThis decision was difficult, however, necessary to allow us to grow responsibly and maintain our long-term financial objectives.”<\/p>\n Some insurance companies have decided to leave Florida, stop writing new policies, or decline to renew current policies. Other insurance companies have been declared insolvent. According to CBS Miami<\/a>, no fewer than six Florida property insurers were declared insolvent in 2022.<\/p>\n Insurers that have stayed in the market have had to find ways to reduce their risks. ABC Action News<\/a> says some Florida insurance companies have been changing their requirements to avoid covering older roofs. A new law states that insurers can\u2019t refuse to write or renew policies on homes with roofs that are more than 15 years old based solely on the roof\u2019s age, but some insurers have been adding stipulations to get around this rule. Additionally, some companies have outright refused to insure older homes, regardless of the age of the roof.<\/p>\n As a result, many Florida homeowners have been struggling to find coverage. Citizens Property Insurance is Florida\u2019s insurer of last resort, where property owners go if they don\u2019t have any other options. ABC Action News<\/a> says Citizens Property Insurance ended 2022 with 1.1 million policies and could reach 1.7 million policies in 2023.<\/p>\n\n